Identify cause of low wage before approving Progressive Wage Policy, says economist

SHAH ALAM - The government has been asked to examine wage related challenges and feasibility of Progressive Wage Policy (DGP) before it is turned into a policy.

Economist Professor Tan Sri Dr Noor Azlan Ghazali said the key issue revolves around underlying reasons of low wages and stagnation among low-skilled workers.

He said if low wages stems from the number of foreign workers, the policy may not be able to address the issue effectively.

"As long as the abundance of foreign workers is not addressed, wages will remain low," he said in a statement.

Current figures show a registered count of 1.4 to 2.1 million foreign workers but the numbers may escalate to five to six million in reality.

The increase in labour has put pressure on wage growth, displacing Malaysians tfrom similar jobs due to low income.

The National Economic Action Council (MTEN) meeting on Aug 7 looked at DGP's proposal to ease income stagnation among low-skilled groups

such as general workers, cleaners, security guards, gardeners, technicians and others.

The Prime Minister Datuk Seri Anwar Ibrahim had said the government is scrutinising proposal for a gradual implementation to allocate funds based on government's capacity and requirements.

Azlan said while Singapore's DGP could be used as a reference but raises questions over the alignment of the country's labour dynamics.

"Almost 97 per cent of registered businesses in Malaysia are micro, small and medium enterprises (MSMEs) involving around 48 per cent of employees. DGP's target group is low-skilled workers from this.

"What makes it more difficult is that almost 79 per cent of MSMEs are micro enterprises that employ less than five workers and are not subjected to minimum wage regulations.

The Malaysian labour market also involves around 3.5 million workers, compounding the complexities of DGP.

He said solving these dynamics are paramount before initiating the policy as it implies government's intervention in the private sector and adding fiscal allocations to employers.